WTI rebounds to above $63.50 on Trump’s threat to Russian supplies, bullish inventory
- WTI price trades in positive territory near $63.75 in Thursday’s early Asian session.
- US crude oil inventories fell by 3.029 million barrels last week, said EIA.
- Trump threatens India and China with additional tariffs over Russian crude imports, sparking fears of supply rerouting.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.75 during the early Asian trading hours on Thursday. The WTI bounces off a five-week low amid bullish US crude oil inventories data and geopolitical tension.
A fall in US crude oil inventories last week suggests demand remains firm, which might help limit the WTI’s losses. The US Energy Information Administration (EIA) Crude Oil Stockpiles report showed crude oil stockpiles in the US for the week ending August 1 fell by 3.029 million barrels, compared to a rise of 7.698 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.1 million barrels.
A recovery in the black gold comes after US President Donald Trump imposed an additional 25% tariff on Indian goods over its purchases of Russian energy. Additionally, Trump said that he could impose extra tariffs on China similar to the 25% levies announced earlier on India, per Reuters. The announcement raised fears of potential supply rerouting and wider geopolitical tensions, particularly as India and China remain the largest buyers of Russian oil.
On the other hand, the upside for the black gold might be capped on the Organization of Petroleum Exporting Countries and allies (OPEC+) output hikes. OPEC+ met virtually on Sunday, agreeing to boost oil production by 547K barrels per day (bps) for September as concerns mount over potential supply disruptions linked to Russia.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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